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How does the sweat equity scheme work?
The scheme allows buyers to earn a deposit by working on housing developments. For example, in Wigan, families contributed around 500 hours of work, which was valued at approximately £10,000 towards their mortgage deposit. This approach helps those who struggle to save money but are willing to invest time and effort into building their future home.
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Can this model help more people buy homes?
Yes, the sweat equity model offers an alternative route to homeownership, especially for first-time buyers or those with limited savings. By earning part of their deposit through work, more people could access the housing market without needing large sums of cash upfront or relying on parental support.
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What challenges does this housing scheme face from lenders?
Many lenders are hesitant to recognize sweat equity as a valid form of deposit contribution because it's a relatively new concept. They often prefer traditional deposits made with cash or savings. For the scheme to expand, lenders need to understand and formally accept sweat equity as a legitimate deposit method.
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Is this scheme available nationwide or just in Manchester?
Currently, the scheme is specific to Greater Manchester, with projects like the one in Wigan. However, its success could inspire similar initiatives elsewhere, especially as housing affordability remains a challenge across the UK.
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What types of work qualify for earning a deposit?
The work typically involves contributing to housing development projects, such as helping with construction, maintenance, or community building activities. The goal is to involve future homeowners directly in the creation of their homes, fostering a sense of ownership and community.
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Could this model replace traditional deposits entirely?
While promising, sweat equity is unlikely to replace traditional deposits completely. Instead, it offers an additional option for those who can contribute time and effort. Combining this with savings or other support could make homeownership more achievable for many.